U.S. corporate tax cut goal in doubt, Trump dines with senators

U.S. Secretary of the Treasury Steven Mnuchin and Director of the National Economic Council Gary Cohn walk after meeting with Republican law makers about tax reform on Capitol Hill in Washington, U.S., September 12, 2017. REUTERS/Joshua Roberts

WASHINGTON (Reuters) - U.S. Treasury Secretary Steven Mnuchin cast doubt on President Donald Trump’s chances of cutting the corporate tax rate to 15 percent, while Trump met with six senators including three Democrats who set clear conditions for future cooperation with him on taxes.

The president is cranking up a publicity campaign to build public support for his general goals of lower and simpler taxes, but no detailed tax plan has been completed or proposed by the White House or the Republicans in control of Congress.

Even after months of discussion within the party, basic questions are unanswered, such as whether tax cuts should be designed so they don’t add to the federal deficit and debt, and how deeply business and individual rates should be cut.

Mnuchin told a conference in New York hosted by CNBC on Tuesday that Trump, as the president has said for months, would like to cut the corporate income tax rate to 15 percent from 35 percent.

Then Mnuchin, a top tax adviser to Trump, said, “I don’t know if we’ll be able to achieve that, given the budget issues, but we’re going to get this down to a very competitive level.”

Later in the day, Trump held a dinner at the White House with the six senators. Reflecting his new willingness to engage with the political opposition, three Democrats attended the dinner. In contrast, Republican leaders in Congress have been trying for most of the year to write a tax bill while ignoring the Democrats.

Also attending were Vice President Mike Pence, White House economic adviser Gary Cohn and Mnuchin.

Pennsylvania Republican Senator Pat Toomey, one of the attendees, said on a conference call later that Trump talked about competitive business taxes, ending taxation of U.S. corporations’ foreign profits, and a middle-class tax cut.

After the meal, Trump took some of the senators on a tour of the West Wing. Later, the Democrats expressed an openness to working with Trump on taxes, but stressed certain conditions.

West Virginia Democrat Joe Manchin said in a statement he would continue to fight for a simpler tax code, but “we must do this without adding to our staggering debt”.

North Dakota Democrat Heidi Heitkamp said in a statement the dinner was a “good discussion” and that she told the president any tax package must support working families and farmers.

CAMPAIGN PLEDGE

Overhauling the tax code was one of Trump’s main campaign promises in 2016, but he has made little progress toward it. After nearly eight months in office, he has yet to win passage in Congress of any major domestic policy legislation.

Donnelly said in a statement, “Tax reform should include measures to support companies that invest in our workers and penalize companies that ship American jobs to foreign countries.”

FILE PHOTO: President Donald Trump holds a news conference in the East Room of the White House in Washington, U.S., September 7, 2017. REUTERS/Kevin Lamarque

A major concern on tax cuts is the federal budget deficit. It would balloon if tax rates were cut too deeply without providing offsetting federal spending reductions and closure of tax loopholes, both politically difficult tasks.

White House budget chief Mick Mulvaney told Fox News on Tuesday that he hoped tax reform would not be revenue neutral, suggesting he is not overly concerned about the deficit and the national debt, now about $20 trillion.

“We need as big and as a dramatic tax reduction and tax reform as we possibly can get,” Mulvaney said.

Mnuchin declined to say what business tax rate was achievable. He said he was “incredibly hopeful” a tax plan could be enacted this year, adding it could be retroactive to January.

Asked if Trump would hold out for a 15 percent corporate rate, White House spokeswoman Sarah Sanders said: “The president is prepared to push for as low of a rate as we can get.”

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RYAN TARGETS 22.5 PERCENT

Republican Paul Ryan, the Republican speaker of the House of Representatives, said last week that “the numbers are hard” to make Trump’s 15-percent corporate tax rate target work. Ryan set his own goal at around 22.5 percent.

Trump’s legislative affairs director, Marc Short, said at a Christian Science Monitor event, “We think that what’s best for the American people is a 15-percent corporate rate right now.”

Financial markets rallied after Trump’s election victory last November in anticipation of rapid tax cuts, especially for corporations, but those expectations have faded.

“The likelihood of passing sweeping corporate reform has diminished,” Jack Ablin, chief investment officer at BMO Wealth Management, said in a research note.

Democrats, who generally oppose tax cuts for the wealthiest Americans, will have negotiating clout in Congress in early December to resist tax changes they oppose, also potentially including a corporate rate cut.

Trump may visit as many as 13 states to sell his planned tax cuts to voters in coming weeks, the White House said.